The Contribution of Migrant Organisations to Income-generating Activities in their Countries of Origin

Enhancing the developmental impact of remittances

This paper explores the role that collective remittances can play in the development of migrants' countries of origin.

Home town associations pool remittances for community development. The study reviews experiences with pooled funds and their role in initiating income-generating activities. Distinguishing collective donations, collective investments and collective savings, it illustrates each form of collective remittance with a case study of diaspora communities in Mexico, Morocco, the Philippines and Turkey. Study findings indicate that:

  • Income-generating development projects financed through migrants' collective donations need to be economically profitable for the target group;
  • Collective investments need to take into account the business and investment climate in migrants' regions of origin;
  • Collective savings that are channelled to MFIs and then made available to local entrepreneurs seem a viable alternative;
  • Exchange of information and experience between migrant organizations, governments and donors is of utmost importance.

Finally, the potential of collective remittances should not be overestimated as a panacea for employment generation and development. Migrants engagement cannot be a substitute for state or private direct investment.